SACRAMENTO — A year after his 2010 election, Gov. Jerry Brown confronted lawmakers about the steep cost of public employee pensions and urged them to pass his 12-point pension overhaul so public retirement costs would not overburden future generations.

“We don’t really have too much choice here,” Brown said, challenging fellow Democrats who control the Legislature to drink the political “castor oil” of pension reforms hotly opposed by politically powerful government employee unions.

Instead, legislators tinkered at the margins, passing some of Brown’s proposals but rejecting those with the biggest cost-savings potential. Although Brown touted it as the “biggest rollback to public pension benefits in the history of California,” it is now clear that the package of modest changes he signed into law in 2012 has done little to slow the growth of retirement costs. New projections show the state’s annual bill for retirement obligations is expected to reach $11 billion by the time Brown leaves office in January 2019 — nearly double what it was eight years earlier.

“The status quo is unsustainable, and it gets worse and worse every year,” said Dan Pellissier of California Pension Reform. “You can nibble at the margins with spiking and that sort of stuff, but those are the easy things. The hard thing is they’ve got to change the cost of the benefits being earned every year by all the employees. It’s just the math. You have to start making less-expensive promises to people.”

Since the 2012 law applied mainly to new hires, savings will trickle in slowly over many years. Pension contributions required from state and local governments will continue to increase — although they are estimated to be 1% to 5% less than they would have been without the changes.

Total savings from the Public Employee Pension Reform Act of 2012 are estimated at $28 billion to $38 billion over 30 years for the state’s main pension fund, the California Public Employees’ Retirement System, and $22.7 billion for the teachers’ pension fund.

But the savings are a fraction of the two plans’ unfunded liability — the gap between the benefits owed to current and future retirees and the money set aside to pay for them. CalPERS’ unfunded liability is estimated at $93 billion. For the teachers’ fund, it is $76 billion.

The fate of Brown’s plan is all the more stark given that the political stars were aligned that year: The governor was popular with voters, enjoyed good relations with public employee unions and had a supermajority of his party in power in the Legislature.

Steep cuts in state spending during the Great Recession, along with a highly publicized scandal in Bell, where city leaders arranged lavish salaries and pensions for themselves, had generated momentum for pension reform. A tax increase anticipated on the November 2012 ballot gave Brown added leverage over legislators.

Still, the bulk of what Brown got were the smallest and easiest fixes. The dynamic is unchanged today. Democratic legislators and labor officials are not as concerned as the governor is about rising pension costs.

“There are those who say those in the public sector should not have pensions that are any better than those in the private sector, and while I understand that answer, I think the answer lies in trying to improve retirement security on the private-sector side,” said Darrell Steinberg, who was president of the state Senate when Brown made his push for pension reform.

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Democratic lawmakers are strongly allied with public employee unions, for which pension protection is a top priority. Public employee unions gave $12.5 million to Democratic candidates for the Legislature between 2010 and 2014, compared with $1 million for Republicans, according to the nonpartisan National Institute on Money in State Politics. Every Democratic lawmaker elected in 2010 received campaign contributions from public sector unions, as did Brown.

“Let’s just be clear: The unions have a stranglehold on the Legislature,” said Sen. Joel Anderson, R-San Diego, the only senator to vote against the pension reform bill.

Former Sen. Joe Simitian, D-Palo Alto, who served on the special pension committee and is now a Santa Clara County supervisor, said the final package reflected the governor’s willingness to confront labor, something no single lawmaker could have done without fear of union retribution.

Assemblyman Warren Furutani, D-Gardena, then chair of the Assembly’s public employees and retirement committee, recalled there was tacit support from labor to close pension-spiking loopholes, but not to do much more than that.

What the Legislature did approve raised the age for retirement with full pension from 50 to 57 for newly hired public safety workers and from 55 to 67 for newly hired civil servants. Lawmakers banned workers from receiving retroactive pension increases and stopped practices such as hoarding vacation and sick time to inflate retirement calculations. They also required minimum contributions from employees toward their pensions, to supplement the much-larger taxpayer-funded contributions.

These changes applied to most employees of the state, counties, cities and local districts. Not included were the University of California and cities that manage their own pension systems, such as Los Angeles, San Francisco, Fresno, San Diego and San Jose.

Brown wanted the Legislature to do more, including adding more independent members to the board of CalPERS, which is dominated by labor representatives. But Democrats did not like the idea of handing the governor more authority. It would also have required voter approval.

Brown’s most ambitious proposal was a hybrid pension plan for new employees that would join traditional pensions and 401k-style plans, which help workers build up retirement savings but don’t guarantee any level of benefits. Brown said the hybrid system, similar to changes for federal workers in the 1980s, would pay retirees 75% of the salaries they collected when active.

But Steinberg, since elected mayor of Sacramento, said, “We were never going to go there because we didn’t believe in that.” As an alternative, lawmakers approved a cap on the salary that could be used to calculate an employee’s pension.

Brown’s 12-point plan also called for public employees to contribute toward the cost of their retirement health benefits, but lawmakers told the governor to negotiate the issue with labor unions. So far, highway patrol officers, prison guards and engineers have agreed to make contributions but the largest state employee union, the Service Employees International Union Local 1000, has threatened a strike.

Sen. John Moorlach, R-Costa Mesa, who serves on the Senate Public Employment and Retirement Committee, said it was disappointing that Brown didn’t get all his reforms.

“Maybe you’re never going to get perfect,” Moorlach said, “so you settle for good.”

Judy Lin is a reporter for CALmatters, a nonprofit journalism venture in Sacramento covering state policy and politics. This story is part of an ongoing project involving the Los Angeles Times, CALmatters and Capital Public Radio.

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